Scenario 1
Beatrice “Bee” Dupree started making jerky at her farm kitchen about a year ago. She felt like she had a couple of good products so she decided to try her luck at a local weekend farmer’s market. This will not be any major source of income and doesn’t plan on doing more than a couple events.
Bee looks into the cost of a booth at the market and finds out that it is $100.00 per season. In addition the market takes an additional 10% of the sales at the end of each market day. She decides that she’ll try out the spring season (which is 8 weeks). Her first day finally arrives and she sells $525.00 of jerky. So her first Saturday at the market cost is as follows:
- $100 for the booth
- $52.50 gets paid back to the market sponsor
The question now is….what else can she document as a cost in order to determine her net proceeds from her first market experience?
HTH Insights
- The first order of business is to determine the actual cost of the meat and any associated supplies such as the spices, packaging, sanitary gloves, disposable containers, etc…
- Another consideration is whether or not it was made utilizing an expensive piece of kitchen equipment. If so she can possibly capitalize and depreciate it.
- Overhead expenses which must be related to the kitchen itself such as: depreciation of the kitchen; utilities; real estate taxes; internet; any other indirect costs associated with the kitchen.
- Bee also needed to keep track of her time to make the jerky and what she would need to pay someone else to make the jerky in order to determine an appropriate cost of labor.
- Travel expenses such as to and from the market; travel to purchase the meat for the jerky; any hotel expenses; any gas/parking/tolls.
- Overhead expenses related to the business itself, such as office supplies, computer equipment, telephone expenses.
In the next scenario we will find out how good Bee was in tracking her cost to do business.